Assume that the Canada Pension Plan promises you $70,000 per year starting when you retire 45 years from today (the first $70,000 will come 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments, including the first one), what is the value today of Canada Pension Plan's promise? The value today of the Canada Pension Plan's promise is $ (Round to the nearest dollar.)
Assume that the Canada Pension Plan promises you $70,000 per year starting when you retire 45 years from today (the first $70,000 will come 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments, including the first one), what is the value today of Canada Pension Plan's promise? The value today of the Canada Pension Plan's promise is $ (Round to the nearest dollar.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Assume that the Canada Pension Plan promises you $70,000 per year
starting when you retire 45 years from today (the first $70,000 will come 45
years from now). If your discount rate is 6%, compounded annually, and
you plan to live for 15 years after retiring (so that you will get a total of
16 payments, including the first one), what is the value today of Canada
Pension Plan's promise?
The value today of the Canada Pension Plan's promise is $
(Round to the nearest dollar.)
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